Comments on: How to Cope with a Lousy 401(k) Planhttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/
Common sense advice on money saving tips, how to get out of debt, high interest savings accounts, cd rates, money market accounts, mortgage rates, money management and more.Thu, 08 Dec 2016 20:37:00 +0000hourly1https://wordpress.org/?v=4.5.3By: Stevehttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-143001
Mon, 04 Aug 2008 02:54:52 +0000http://www.getrichslowly.org/blog/?p=1953#comment-143001It’s pretty rare to be able to transfer out of a plan while you’re still employed at the same place. It’s certainly not required by law – and thus unlikely to be offered by the worse plans. In fact in my experience even after you leave it can take a little while to get your money from their grubby paws, and they can charge you for the privelage too (I got dinged for 50 bucks personally)

]]>By: Peterhttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142967
Sun, 03 Aug 2008 20:26:42 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142967One needs to check the rules for 401k plans. Most of the ones I’ve had in the past had vesting rules that applied to the money in the account and not the time served with the company. For those, I had to let the money stay in the 401k for 3 years after leaving the company in order to get the match. With my current employer, the match vests immediately (=becomes mine right away).

One skill I recommend is that folks learn how to read their plan’s 5500 filings. These are filings that are open to the public and cover 401k-type plans as well as pensions (they also cover some insurance plans like vision and dental). This way one can learn what sort of fees the plan administrators are sucking out of the plan, as most plan documents will not disclose it at all. For this year, almost all 403b plans are exempt from 5500 filings. As of 2009, almost all 403b plans will have to make 5500 filings.http://www.dol.gov/EBSA/5500MAIN.HTML

Some plans charge a flat dollar amount per year, and as many companies are trying to cut costs, the plan administrators are coming up with new ways to break up the fees. So instead of say, $25k/year for administering the plan, they’ll charge instead $4k/year plus $25/fund/employee. Many mismanagers don’t realize that when the fees are broken up that way, they end up paying more (sometimes double) the fees for administering the plans.

professorh, what you are describing sounds like a typical replacement for a pension in the educational system. Without reading your plan documents, or knowing if you have FICA withheld from your paycheck, from what you’ve described, that 9% is employer contribution towards your retirement – not a match. It is up to YOU to put your own contribution towards your own retirement. 403b limits are the same as 401k limits – which is $15,500 this year. So you can put $0 in your 403b, or up to $15,500, and if your plan is like most university plans, the school put 9% of your salary in the 403b even if you put $0.

If you are not paying social security taxes, then the 9% will replace most/all of your social security benefits – see the Government Pension Offset Reform Act for more details. Essencially, that act was a major FU to the Democratic party by punishing people who work for state governments as well as universities.

In the “for profit” world, the “employer match” would be a percentage of your salary that the employer would put into your 401k plan. For round numbers, let’s pretend you make $100k/year. If the “match” is 3%, then the employer will match $3k/year – if and only if you put at least $3k in yourself. If you put $2k in, then they’d only put in $2k for a match.

Re: I can’t download the transactions into Quicken, or any other format that’s easily used by software.

I have had similar problems with other data on some sites. You can cut and paste web data into spreadsheets.

-Just highlight the area of the webpage you want to collect and right click/copy.

– Open your spreadsheet. I use Excel. Click on an open cell and ‘paste special’. I select ‘text’ and it fills the cells properly.

You can then massage the data any way you wish. There is a caveat. That is that some headers ( For example – Date, deposit amount, transaction code… etc..) reside within their own cell structure and may not transcribe properly. You will have to type them manually.

Thx jegan 😉

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]]>By: andyhttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142918
Sun, 03 Aug 2008 12:01:18 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142918I have 1 401(k)s myself, one through Fidelity from my old job and the other through a small local regional bank for my current job.

The Fidelity account I wasn’t required to roll over or anything when I left the job, so I kept it open and let the money sit. The plan seems to be decent enough.

The other plan, however, drives me crazy. I can’t check my actual rate of return nnvia the website; it’s calculated by including my contributions, which gives me no idea how well it’s actually doing. I can’t download the transactions into Quicken, or any other format that’s easily used by software (CSV, etc.). They really screwed up one of my transactions about 18 months ago, which I didn’t catch for several months, and it took about a month to get that fixed. Information about the funds they offer is difficult to get at.

I’ve considered taking the portion of my new 401k which is vested and rolling that into a new account, and possibly rolling my Fidelity one into that as well so that everything is in one place for easy management. I think Fidelity even offers that as a service. Is doing that a good idea?

My wife has a Hancock 401k and many of my complaints for my current plan apply to hers as well.

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]]>By: No Debt Planhttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142437
Wed, 30 Jul 2008 16:51:25 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142437JD, I would be really interested to know if you knew anyone who ran a 401k plan administration company. Do you know what the requirements are?

]]>By: kick_pushhttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142432
Wed, 30 Jul 2008 16:02:51 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142432at my company you have to stick around for at least 5 years before being fully vested

i’ve been here for almost 9 years now.. so i’m good =)

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]]>By: Ancahttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142396
Wed, 30 Jul 2008 05:10:19 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142396How many companies have a vesting schedule tied to their matching contribution? I just found out mine does, and if I don’t stick around for 2 full years I get nothing, then 20%, up to 100% at the end of 7 years. I understand why companies have these “loyalty incentives” but I’m pretty disappointed I don’t get to keep all the free money I was led to believe I would get.

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]]>By: rwutthttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142354
Tue, 29 Jul 2008 21:50:00 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142354Research pays off:
I found it very hard to get the ticker symbols on my 401(k), but persistence paid off. then, from Morningstar, I found that they had an average expense ratio of 1.1%, combined with performance worse than my Vanguard IRA, with its 0.2% expense ratio.
Then I found out that I could buy Vanguard funds for my 401(k). They charge a slightly higher fee for these ‘outside’ funds, but the net result, after creating a pretty well balanced portfolio that replaced the ‘house’ offerings with Vanguard wherever possible, was a 0.6% expense ratio, and better performance. My employer matches 20% of my contribution, so it will actually outperform the Vanguard IRA, even w/ the slightly higher fees. But look at http://images.businessweek.com/mz/08/05/pop_0805_73plus.jpg
to see what 0.7% will do over 10 years compared to 0.2%!!!

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]]>By: Carolhttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142334
Tue, 29 Jul 2008 19:47:05 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142334When I started investing many years ago and knew NOTHING at all about mutual funds, I went to Vanguard’s website and started reading in their Education section. It is available to anyone, regardless of whether you have investments there, and it’s a great place to start. You will very clearly be able to see the impact of fees on your investments over time. Fees and asset allocation (the distribution of your $$ between cash, bond funds, stock funds, etc) are the two things over which investors have the most control. It is worth it to take the time to learn about them.

Companies (not the 401k providers) ultimately decide who will foot the bill for the plan. There are real expenses associated with 401k plans that must be paid somehow. Some companies that are struggling with the costs of the plan will choose to offer low cost funds and charge participants a fee (usually small) to participate. This is a much more cost-effective scenario for everyone involved than choosing providers with high cost funds or wrap fees.

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]]>By: Stevehttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142305
Tue, 29 Jul 2008 16:48:58 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142305Great, now poor JD has to work harder since we’re all going to read the notes from now on.

Anyways, it can be pretty hard to figure out how much your 401k is costing you. It took me a couple months (of non-continuous effort) to find out that my current 401k adds 0.96% to every expense ratio. At least when I had a johnhancock 401k they transparently displayed the 0.5% extra expense ratio… though I do wonder now if there weren’t more hidden fees in there…

]]>By: Austin Hike and Bikehttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142295
Tue, 29 Jul 2008 16:23:03 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142295We seem to have a pretty good return every year from our 401k’s. But sad to say I dont know much about the details. I need to look into that.

]]>By: Mark Hhttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142251
Tue, 29 Jul 2008 14:22:06 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142251Guys, Exchange Traded Funds (ETFs) are a great way to invest in your retirement accounts. But you have to know which ones to buy and how to manage them. I work with Teeka Tiwari over at ETF Master Trader and we teach investors how to invest in ETFs, sector by sector. Check us out.

I’d say if your 401(k) plan doesn’t offer any index funds with expense ratios below 0.50% then it’s a bad 401(k) plan. This is especially true with bond/money market funds. Research has shown that “active managers” have little to offer at all in bond type funds, so you should strive to get your fees as low as possible in those. Active managers don’t really have anything to offer in stock funds either, but clever marketing, the media, and greed help keep people convinced otherwise.

Bottom line…keep it to funds with an expense ratio below 0.50%. If you don’t have any of those, complain or find a way to work around it. (e.g., only use the good index funds in your 401(k) and keep the rest of your savings in an IRA or taxable account at Vanguard)

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]]>By: Mark Nelsonhttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142242
Tue, 29 Jul 2008 13:37:45 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142242I would only invest the amount so you get your companies match. That is free money. If the fund invests in mutual funds go with index funds.

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]]>By: Timhttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142226
Tue, 29 Jul 2008 12:36:00 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142226Check whether your company allows in-service withdrawals, not to be confused with hardship withdrawals. My company allows it without the usual 59 1/2 age restriction for their matching funds only. I now periodically rollover the eligible funds to an IRA with better investment choices.

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]]>By: professorhhttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142221
Tue, 29 Jul 2008 12:17:10 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142221Tell me something, please. My employer offers 9% — no matter what — of my salary. I always hear about “matching” employer contributions. But, what to do in the case of a situation like mine? I’m a doof re: money and I’ve not been able to figure out how to serve my interests best under such a plan. Match? Match up to a point? Take the free money and run? Help! Thanks!

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]]>By: Writer's Coinhttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142218
Tue, 29 Jul 2008 11:15:01 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142218COMPLAIN! I noticed I was paying ridiculous fees for one 401k fund and so I sent an email to the finance department. It wasn’t a loud, wining email. It was a very matter-of-fact “here is why I don’t think this is any good” email and they agreed. They will be adding more appropriate options soon, including the specific investments I wanted! Of course, our 401k plan is actually really good, it was just that one fund that was a rip off.

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]]>By: Petehttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142214
Tue, 29 Jul 2008 10:23:37 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142214I don’t know how good my 401k is, but it seems good to me, especially for a retail position.

I get a variable match depending on a few factors but average out between 4% – 6% match.

We also have profit sharing that goes in our 401k. More free money!

But what I really love about it is that we can direct our investment ourselves to a degree. I have mine on the high-yield options, although it’s risky I am only 22 so should it take a massive tumble I can even it out over the next 50 years.

i was able to look up my roth though.. it’s a fidelity target fund (4 star) with a “blend” style

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]]>By: Trevorhttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142197
Tue, 29 Jul 2008 06:09:40 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142197I’ve never had the option of a 401k, but as soon as I do I’ll be taking your advice. Like you mentioned, you need to look into an IRA as an alternative- that’s what I’m doing currently.

You need some sort of tax protective vehicle to get you to retirement!

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]]>By: Jim Lippardhttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142189
Tue, 29 Jul 2008 03:42:17 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142189I wrote about my wife’s lousy 401K, which offers some nice investment options, except that they are wrapped in annuities from John Hancock rather than direct investments in mutual funds, and have higher-than-average expense ratios and fees that are chewing up gains:

]]>By: John Eganhttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142187
Tue, 29 Jul 2008 03:08:33 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142187“kick_push”.. To find out which of the available funds are worth investing in is to write down the ‘tickers’ and go to Morningstar.com. Type in each ticker individually and print out the cover sheet (summary page)…

If you are not involved in investing, Morningstar does a pretty good job of assisting the purchasers. For each fund, they provide a ‘star-rating’. 5 stars is best and so on. That will tell you which funds rate well within their class.

Based on the printouts, you can look at the ‘style-box’. This tells you whether or not the fund is a large cap, mid-sized cap, or small-cap fund. It will also tell you what category it fits into.. Value, Growth or Blend. In essence, they print a box, which is divided into 9 squares… It’s real simple to understand.

If you, as most people seem to be inclined, want to get a nice mix, then you will want to **not** duplicate the style of fund. In essence, if you stick to ‘blends’, you will have a fund that has a mix of ‘value’ and ‘growth’. (If you read this blog, you will note that ‘Warren Buffet…. God of all investors…. Is a value investor. People like Jim Rogers and Soros on the other hand tend to be more growth oriented..To over-simplify, ‘value’ means ‘buying it cheap’ and ‘growth’ means ‘it’s on the fast track to profits’.) A blend means that the manager has a mix of both.

If you want to play the ‘complete world of investing game’. You will look for 4 or 5 star rated funds that are ‘low risk’ and ‘low fees’. Your mix will include large, medium and small cap blends and have an exposure to emerging markets. You may want to include something like the Pimco bond funds (Although to state this makes my skin crawl as you may get better returns by leaving cash in your account at whatever the interest rate is.. Let’s face it, no risk and possibly better over-all returns.)

You can then take the funds you have chosen and place them in a portfolio using Moningstar’s portfolio manager. Type them in and view the mix, and it will show you what they expect the yearly returns will be, risk etc…

my bosses are such cheapskates so I finally just opened a Roth IRA. these same bosses picked out the best health plan that works for them and their families, but screws over everyone else. thank god I got on the fiance’s health plan.

I have no experience yet with 401k so I have nothing constructive to offer. uh, go Vanguard?

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]]>By: Erichttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142174
Mon, 28 Jul 2008 22:59:59 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142174I have a Roth IRA with AXA Equitable. They have great service, but they are not cheap when it comes to fees. I was thinking about rolling it over to ING Direct to save money on the fees, maybe in the future. My account with them has done pretty well this year all things considered.

This might be a good time for people to make their contributions since the market is low, but I think better times might come by waiting a little longer too.

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]]>By: Stevehttp://www.getrichslowly.org/blog/2008/07/28/how-to-cope-with-a-lousy-401k-plan/#comment-142172
Mon, 28 Jul 2008 22:52:34 +0000http://www.getrichslowly.org/blog/?p=1953#comment-142172The negative money market fund was an extreme example. What if the extra cost is 0.5%? 1%? Where do you draw the line?